By: Madhumita

Madhumita — Thu, 15 Oct 2015 10:07:01 +0000

It really is a peonsral choice but most landlords go down the interest only route. Unlike your own home, you can sell the property at the end of the mortgage to repay the debt without leaving yourself with nowhere to live! The other reason for landlords taking this route is that in the current climate the rental income is often not sufficient to cover the cost of a repayment mortgage plus the other costs.The main question you should ask yourself is whether you want capital growth (to see the money you invested grow) or monthly income. If you are after monthly income then you should go for interest only as this will give you the lowest payments and the most money in your pocket each month. I am a financial adviser and we own 5 properties ourselves and do not make much money on the monthly income but we are in it for the capital growth over the longer term. Yes we may have mortgages on the properties and therefore don’t own the entire property in effect but we do own the part that is unencumbered (without mortgage). An increase in value in the property is what we are after. We have a couple of properties on repayment as they have much lower mortgages on them allowing the rent to still cover the payments but the others are interest only. As remember, you will need to have approx. 15% deposit and I would recommend having at least 6 months rent put aside for any time the propertyis empty or maintenance issues.

Comments on: Borrowing with a rental guarantee income

By: Madhumita